HomeMy WebLinkAboutACSA Ann Fina Rept Ending 63020Albemarle County Service Authority
Charlottesville, Virginia
Comprehensive Annual Financial Report
For The Year Ended JUne 30, 2000
On the cover:
The Northfields water pumping station, the first project of its type executed solely
with Authority personnel. The station was completely reconstructed (except for
the brick shell) and refurbished in Fiscal Year 2000: engineering staff provided
design and management, and maintenance staff performed the work.
ALBEMARLE COUNTY SERVICE AUTHORITY
COMPREHENSIVE ANNUAL FINANCIAL REPORT
FOR THE FISCAL YEAR ENDED JUNE 30, 2000
Prepared by
Finance Department
Raoul James Kister
Finance Director
Charlottesville, Virginia
ALBEMARLE COUNTY SERVICE AUTHORITY
June 30, 2000
BOARD MEMBERS
J. Randolph Parker, Chairman
Donald J. Wagner, Vice-Chairman
William Bolton, CPA Robert H. Humphris
Hollis Lumpkin David Moyer
OFFICER
John W. Brent
Executive Director
Secretary-Treasurer
FISCAL AGENT
Bank of America Trust Company, Norfolk, Virginia
TRUSTEES
Bank of New York
SunTrust Bank
ALBEMARLE COUNTY SERVICE AUTHORITY
COMPREHENSIVE ANNUAL FINANCIAL REPORT
FOR THE FISCAL YEAR ENDED JUNE 30, 2000
TABLE OF CONTENTS
INTRODUCTORY SECTION
Pa.qe
Authority Officials .................................................................................................................... Facing page
Letter of Transmittal ................................................................................................................ 1
Certificate of Achievement ...................................................................................................... 9
Organizational Chart ............................................................................................................... 10
FINANCIAL SECTION
Exhibit
Independent Auditors' Report ................................................................................................. 11
Comparative Financial Statements:
Balance Sheets - June 30, 2000 and 1999 ............................................................ 1 12
Statements of Revenues, Expenses and Changes in Equity -
Fiscal Years Ended June 30, 2000 and 1999 ...................................................... 2 14
Statements of Cash Flows - Fiscal Years Ended June 30,
2000 and 1999 ..................................................................................................... 3 15
Notes to Financial Statements - Fiscal Years Ended June 30,
2000 and 1999 ................................................................................................................... 16
Supporting Schedules:
Schedule
Comparative Schedule of Revenues--Budgetand Actual" Fiscal
Years Ended June 30, 2000 and 1999 ................................................................. 1
Comparative Schedule of Expenses--Budgetand Actual-Fiscal
Years Ended June 30, 2000 and 1999 ................................................................. 2
27
27
STATISTICAL SECTION
Table
Revenues by Source, Last Ten Fiscal Years ............................................................. 1
Expenses by Function, Last Ten Fiscal Years ........................................................... 2
Schedule of Insurance in Force, June 30, 2000 ......................................................... 3
Revenue Bond Coverage, Last Ten Fiscal Years ...................................................... 4
Billed Services and Connections, Last Ten Fiscal Years ........................................... 5
Construction, Property Value and Bank Deposits, Last Ten Fiscal Years .................. 6
Miscellaneous Statistical Data ................................................................................... 7
29
29
30
30
31
31
32
COMPLIANCE SECTION
Independent Auditors' Report on Compliance and the Internal Control Structure ................. 35
INTRODUCTORY SECTION
Albemarle County .
Service Authd rity
Serving ~ Conserving
August 4, 2000
Board of Directors and Executive Director
Albemarle County Service Authority
Charlottesville, Virginia
Gentlemen:
The Comprehensive Annual Financial Report of the Albemarle County Service Authority
(the Authority) is submitted herewith. This report has been prepared in conformity with the
· dards romulgated by the Governmental Accounting Standards
re ortin and acco.un, tm.g stan. P__ Government Finance Officers
B~rd, gthe Financial /-kccount~ng Standards Board, and the
· , mental Accounting, Auditing and Financial Reporting for
Association? (,GFO. A)_.?_o_v_.e..rn.,.., ,,.,,,. with such modifications as apply.to, our, s!atu_s_a~s.a~n_.
Enterprise t-unas oT govu..,,~,,,~,, .......
, ration Responsibility for the accuracy ot me aa[a, anu ~u~
independently cha.rte, re.d corpo .... · ......,..,;,.,. 'n ina all disclosures, rests w~th the
completeness and talrness OT the pJ~,,.~,.,,-,., I_clud v
. Authority·
We are submitting a copy of this report to the GFOA in application for a Certificate of
Achievement for Excellence in Financial Reporting. We believe that the information contained
herein is sufficient to fully represent the financial results of the Authority's operations for .t.he
year ended June 30, 2000, and to provide the reader with an accurate and useful picture of the
Authority's status at year-end·
We have determined, after an examination of the factors involved in the Governmental
Accounting Standards Board's definition of "Component Unit" for financial reporting purposes,
that we are not a component unit of the County of Albemarle and will not be included in their
financial report; therefore, we are issuing a comprehensive annual financial report rather than a
component unit financial report. The justification for this decision is outlined in Note 1 to the
financial statements.
Report Structure
This report is divided into four sections, as follows:
· Introductory - provides general information about the Authority's nature, functions
and organization; this transmittal letter is part of that general information.
· Financial - contains the financial statements, and the notes thereto, on which the
auditors state an opinion as to whether or not they fairly represent the financial
position, results of operations and cash flows of the Authority as of and for the
fiscal years ended June 30, 2000 and 1999 in conformity With generally accepted
accounting principles. The supporting schedules detailing budget vs. actual
revenues and expenses are also included in this section·
Board of Directors and Executive Director
August 4, 2000
· Statistical - contains supplementary financial, demographic and general informa-
tion, not part of the auditors' opinion, provided to "flesh out" the Authority's activi-
ties and present historical data for trend analysis.
· Compliance - contains the auditors' reports on the internal control structure and
compliance with laws and regulations; these reports provide the results of tests
of the accounting system and internal Authority procedures undertaken in accor-
dance with the requirements of various standard-setting bodies.
Organization and Function
The Authority was established in 1964, pursuant to the Virginia Water and Waste
Authorities Act, to provide water and sewer service to those jurisdictional areas in Albemarle
County designated by the County's Board of Supervisors. The current service areas include the
urbanized ring around the City of Charlottesville (the "City"), the communities of Crozet and
Scottsville and the village of Rivanna. A six-member Board of Directors, appointed by County
Supervisors for renewable four-year terms, appoints management and governs Authority
operations.
In June 1973 the Authority and the City sold all water and sewer treatment and major
distribution facilities to the newly-formed Rivanna Water and Sewer Authority, which wholesales
finished water and sewer treatment services to the Authority and City. In 1975 the Authority
purchased from the City the facilities to serve all current water and sewer customers outside the
City limits, and since then it has been the sole public retailer of these services in the County.
In addition to retailing finished water and sewage collection service, the Authority
constructs pumping stations and line extensions; purchases, connects to the system, and
upgrades private water systems; installs water supply and sewage collector systems; inspects
water delivery and sanitary sewage collector systems installed and contributed to it by
developers; and maintains such constructed and contributed facilities.
Economic Condition and Outlook
Albemarle County continues to grow and prosper. The Charlottesville,Albemarle area's
unemployment rate (1.4% for calendar years 1998 and 1999) is one of the lowest in the State.
The University of Virginia's ongoing billion-dollar capital development program and the
associated University of Virginia Real Estate Foundation provide significant construction
employment, and its 700-bed teaching hospital continues to be a magnet for health profession-
als. Diversified industrial and commercial activity, as Well as significant state and federal
government presences (headquarters for the Forestry Service, State Police and Division of
Mineral Resources, future home of the National Ground Intelligence Center), provide a stable
base for future economic development. The area is highly rated in several national "livability"
studies, and is becoming an attractive retirement destination.
However, there are two related complicating factors that bear watching:
· The labor market has long been extremely tight, and lower-paying jobs are very diffi-
cult to fill for long. At the same time, the cost of living in the area is relatively high,
and affordable housing for workers in those jobs is scarce.
· A large pool of "over-qualified" students and their spouses vie for available part-time,
seasonal and entry level jobs, exacerbating a difficult situation.
2
Board of Directors and Executive Director
August 4, 2000
In May 2000 the Authority's largest customer, ConAgra Frozen Foods, announced that it
was closing its Crozet plant and selling the property. Besides the loss of 600-700 jobs, this will
have, when the closing is complete in October, a significant short-term effect on the Authority's
operating income, since the plant provided 6.25% of total water sales revenue, and 9% of
sewer treatment revenue, for FY 2000. Operating costs for the Crozet water production and
sewer treatment facilities will be reduced, lessening Rivanna's charges for providing those
services to the Authority, but the exact impact of this event is not yet known.
Nevertheless, the Authority continues to grow along with the County: in this fiscal year
461 new water connections were added, bringing total connections as of June 2000 to 12,957.
Including multiple units behind master meters, as in apartment complexes, the Authority now
serves approximately 19,845 housing units, businesses, industries and institutions.
ALBEMARLE COUNTY SERVICE AUTHORITY
Service connections at June 30, 1991-2000
12,000
10,000
8,000
6,000
4,000
1991
992
199: 199z 1995 1996 1997 1998 1999 2000
Water Connections · Sewer Connections
Major Initiatives and Accomplishments
Major initiatives and accomplishments during the fiscal year ended June 30, 2000
included:
Assisting the town of Scottsville in successfully applying for a Community Develop-
ment Block Grant, which will provide 40% of the funding to construct a sewer system
for an outlying subdivision.
Establishing a pilot "conservation assistance" program. All customers in the town of
Scottsville were offered household conservation devices (reduced-flow showerheads
and faucet aerators, toilet tank dams, etc.) and installation assistance. To support
our conservation message, water saving pamphlets are given to all new customers,
and conservation tips are included on water bills.
Adopting water conservation rates that increase during the summer and are actually
lower than the previous rate for the remainder of the year, to encourage careful use
of potable water.
Board of Directors and Executive Director
August 4, 2000
Replacing the in-house bill mailing system to improve customer notification capabili-
ties; reduce mailing costs and streamline the billing process.
Participating with the City, County and the University of Virginia to generate digital
planimetric maps encompassing the City, County and Authority water and sewer
service areas. ·
Replacing the Authority's oldest residential meters (about one-third were at least 12
years old) to improve registration accuracy.
Adopting, in conjunction with the City, emergency water restrictions to be activated
during a drought.
Accounting and Budgetary Controls
Although no cost-effective set of accounting controls can guarantee complete freedom
from unauthorized use of assets or errors in financial data, we believe that our procedures
provide reasonable assurance that assets are properly recorded and protected and that
financial data can be confidently used in the preparation of reports, historical summaries and
projections. Because the Authority is designed to be a self-supporting and self-sustaining
entity, the measurement focus of its financial accounting system is on the preservation of
capital. This type of accounting measurement focus, also called a "cost of services" focus,
requires that depreciation be taken, and shown as an expense, for all exhaustible assets.
Closely related to the measurement focus, which determines what is measured, is the basis of
accounting, which determines when transactions are recognized. The Authority uses the full
accrual basis of accounting, in which revenues are recognized in the period in which they are
earned and expenses are recognized in the period in which they are incurred, regardless of the
actual receipt or disbursement of cash.
The basic system of accounting control involves segregation of duties: employees with
the authority to disburse funds are not involved in the preparation or recording of checks, and
those who prepare disbursements submit batch total reports to the Finance Director for
approval. Two signatures (the Executive Director's and the Finance Director's) are required for
all checks except petty cash, all bank accounts are reconciled monthly, and the Board of
Directors receives monthly reports on revenues and expenses.
The Authority is required by the Trust Agreements for its Bonds to prepare and adopt an
annual operating budget. The budget corresponds to the fiscal year, and is prepared and
adopted as follows:
1. Department heads prepare preliminary operating budgets and submit them to the
Executive Director.
2. The Executive Director, in consultation with the department heads, makes such
changes in the departmental budgets as he sees fit.
3. Revenue projections for the budget year are divided between water and sewer to
determine if current rates are sufficient to cover costs, including operating expenses,
scheduled debt retirement, depreciation, and budgeted transfers to construction and re-
placement accounts, with a margin of safety to cover emergencies.
4
Board of Directors and Executive Director
August 4, 2000
4. If insufficient revenues are projected for the budget year, a rate increase is included
in the budget recommendation.
5. Prior to the adoption of a budget in which any rate increase is recommended, the
Authority holds a public hearing on the increase, and any change in rates is approved by
the Board of Directors before adoption of the budget.
6. After adoption, increases or decreases in the total budget are made only upon Board
approval, and the budget lapses at the end of the fiscal year for all accounts except
multi-year construction projects and specific reappropriations for funds committed at
year-end for which goods and/or services have not been received. The comparative
schedules of revenues--budget and actual and expenses--budget and actual compare
budget and actual data. Budgetary control is exercised at the departmental level. Any
changes to the departmental budget totals as adopted require Board approval. A review
of budgetary comparison schedules presented herein will disclose how accurately the
Authority was able to forecast its revenues and expenses.
Cash Management
Idle cash, pooled and invested in the Virginia Local Government Investment Pool and
managed funds, generated earnings of $674,215 during fiscal year 2000. Additional interest
earnings of $84,525 came from Treasury bills, notes and bonds in the accounts controlled by
the Fiscal Agent and Trustees.
Debt Administration
Revenue bond coverage, the ratio of gross revenues less direct operating expenses to
debt service requirements, was 2.73 in fiscal 2000. The minimum coverage required by
outstanding bond indentures is 1.20. At June 30, 2000, outstanding long-term debt, including
the current amount payable, less the unamortized balance of the discounts on the 1991 and
1993 Bonds (see Note 8, pages 22-23) was $4,145,064.
General Operations
Revenue Sources, FY 2000
Otherl
Interest
Rental Income-
Connection
Charges
Service
Charges
5
Board of Directors and Executive Director
August 4, 2000
Operating revenues from water sales, sewer collection charges and connection fees
totaled $7,596,381, a decrease of 2% from the previous year's $7,748,190. Billed water volume
was 1.75 billion gallons, down 2.8% from 1999. Sewer billed volume decreased about 2.3%,
from 1.33 to 1.30 billion gallons. Gross revenue of $8,721,093 was 1.8% above the budget
estimate, and volume charges were about 3% below projections.
Expense Categories, FY 2000
Other
Depreciation
Bond
Intere~l Water & Sewer
Operation~
Expenses for water purchase and sewer treatment were 5.6% below budget; all other
operating expenses were about 16% below budget (see Schedule 2, page 27). Our operating
loss, after including depreciation and amortization charges of $1,298,982, was $1,011,242, and
the net loss for the year was $261,554, compared to a net gain in FY 1999 of $ 92,070.
Construction Activity and Funding
The Authority accepted dedication of water and sewer facilities from developers with a
total value of $1,429,424; the previous year's total was $3,077,502. At June 30, 2000, the value
of self-funded construction in progress was $3,599,692, up from the prior year's $2,238,403.
Principal Authority projects begun or completed during the year included:
· Designing a replacement water system for Farmington (the only subdivision in our
service area with private waterlines).
· Rehabilitating, with Authority forces, a water pump station and storage tank.
· Replacing water lines in two large subdivisions.
· Constructing a sewer system to serve portions of an older subdivision.
Risk Management
The Authority employs a combination of traditional insurance coverages and an active
safety program to manage risk:
· A Safety Committee composed of the Executive Director and one individual each
from meter reading, engineering and maintenance meets bi-monthly to discuss
safety issues and promulgate procedures. Regular training sessions are held for
employees involved in high-risk activities, through programs offered by the American
Waterworks Association, the Virginia Department of Occupational Safety and Health
Board of Directors and Executive Director
August 4, 2000
and the National Safety Council.
In accordance with the Federal Motor Carrier Act amended in 1994, the Authority
administers an alcohol and drug testing program for all employees required to have
Commercial Drivers' Licenses.
· A Summary of Losses report on the Authority's workers' compensation experience
indicated that, for the fiscal years 1983 through 2000, the Authority's workers' com-
pensation claims paid averaged 19.7% of premiums. In fiscal year 2000 this "loss
ratio" was 161%; our public entity pool's average was 41.4%, and commercial ac-
counts typically run in the 80-85% range.
Equipment Replacement and Building Maintenance Accounts
The Equipment Replacement account was established to provide for funding for the
eventual replacement of major mobile and operating equipment (vehicles, construction equip-
ment, computers, radios, etc.); an annual appropriation is made to replenish it as purchases are
made. The 2000 appropriation was $100,000. $150,837 was expended during the 2000 fiscal
.year, of which $123,896 was capitalized, leaving residual expenses of $26,941. Cash and
~nvestments in this account, which is part of the "Construction and replacement" category of
restricted assets (see Note 4, page 18), totaled $386,988 as of June 30, 2000.
In FY 2000 a Building Maintenance account was created, with an initial appropriation of
$12,000, to pay for structural maintenance expenses for the Authodty's office complex, and
$6,186 was expended.
Y2K Preparation Results
Successful implementation of policies to prevent disruptions caused by Year 2000 date-
change software anomalies made the new calendar year a "non-event." Like most organiza-
tions, the Authority had updated, replaced and/or tested all mission-critical components by the
summer of 1999, and although staff coverage was provided on Saturday, January 1st, 2000,
and all major systems were tested prior to business start-up the following Monday, no signifi-
cant problems were discovered.
Annual Audit
State law and outstanding bond resolutions require an annual audit of the books and
records of the Authority. This requirement has been satisfied by engaging independent certified
public accountants, whose reports are included herein.
Certificate of Achievement
The Government Finance Officers Association of the United States and Canada (GFOA)
awarded a Certificate of Achievement for Excellence in Financial Reporting to Albemarle
County Service Authority for its comprehensive annual financial report for the fiscal year ended
June 30, 1999. The Certificate of Achievement is a prestigious national award recognizing
conformance with the highest standards for preparation of state and local government financial
reports.
In order to be awarded a Certificate of Achievement, a governmental unit must publish
an easily readable and efficiently organized comprehensive annual financial report, whose
contents conform to program standards. Such report must satisfy both generally accepted
accounting principles and applicable legal requirements.
Board of Directors and Executive Director
August 4, 2000
A Certificate of Achievement is valid for a period of one year only. The Albemarle
County Service Authority has received a Certificate of Achievement for the last eighteen
consecutive years (fiscal years ended June 30, 1982 through 1999). We believe our current
report continues to conform to Certificate of Achievement program requirements, and we are
submitting it to GFOA.
Acknowledgment
This report couldn't be prepared without the assistance of many members of the
Authority staff, particularly Lisa Allen and Tonya Foster of the Finance Department, whose help
is gratefully acknowledged. Thanks are also due to J.W. Brent, Executive Director, and the
Board of Directors for their interest in, and support of, the Authority's pursuit of financial
reporting excellence.
Respectfully submitted,
Raoul James Kister
Finance Director
8
Certificate of
Achievement
for Excellence
in Financial
Reporting
Presented to
Albemarle County Service
Authority, Virginia
For its Comprehensive Annual
Financial Report
for the Fiscal Year Ended
June 30, 1999
A Certificate of Achievement for Excellence in Financial
Reporting is presented by the Government Finance Officers
Association of the United States and Canada to
government units and public employee retirement
systems whose comprehensive annual financial
reports (CAFRs) achieve the highest
standards in government accounting
and financial reporting.
Executive Director
9
Albemarle County Service Authority
Organizational Chart
IBoard of Supervisors
I Administration I I
Finance II Engineering
I I MaintenanceI
10
FINANCIAL SECTION
ROBINSON~ FARMER~ COX ASSOCIATES
A PROFESSIONAL LIMITED LIABILITY COMPANY
CERTIFIED PUBLIC ACCOUNTANTS
INDEPENDENT AUDITORS~ REPORT
TO THE BOARD OF DIRECTORS
ALBEMARLE COUNTY SERVICE AUTHORITY
CHARLOTTESVILLE, VIRGINIA
We have audited the accompanying balance sheets of the Albemarle County Service Authority as of
June 30, 2000 and 1999, and the related statements of revenues, expenses and changes in equity, and
cash flows for the years then ended. These financial statements are the responsibility of the Authority's
management. Our responsibility is to express an opinion on these financial statements based on our
audit.
We conducted our audit in accordance with generally accepted auditing standards; the standards
applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller
General of the United States; and the Specifications for Audit issued by the Auditor of Public Accounts
of the Commonwealth of Virginia. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of material misstatement.
An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial statement presentation. We
believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the
financial position of the Albemarle County Service Authority at June 30, 2000 and 1999, and the results
of its operations and its cash flows for the years then ended in conformity with generally accepted
accounting principles.
In accordance with Government Auditing Standards, we have also issued a report dated August 4, 2000
on our consideration of the Albemarle County Service Authority's internal control over financial
reporting and over tests of its compliance with laws, regulations, contracts and grants.
Our audit was made for the purpose of forming an opinion on the financial statements taken as a
whole. The accompanying financial information listed as supplemental schedules in the table of
contents is presented for purposes of additional analysis, and is not a required part of the financial
statements of the Albemarle County Service Authority. The information has been subjected to the
auditing procedures applied in the audit of the financial statements and, in our opinion, is fairly stated
in all material respects in relatiOn to the financial statements taken as a whole.
The statistical schedules listed in the table of contents are not a required part of the basic financial
statements, and we did not audit or apply limited procedures to such information. Accordingly, we
do not express an opinion on them.
Charlottesville, Virginia
August 4, 2000 11
Cash and cash equivalents (Note 5)
Investments (Note 5)
Contracts receivable, current portion (Note 3)
Accounts receivable (Note 2)
Interest receivable
Inventory of materials and supplies
Prepaid expenses
Total current assets
Other assets:
Contracts receivable, less current portion (Note 3)
Unamortized bond issuance costs
Total other assets
Restricted assets (Note 4):
Cash and cash equivalents (Note 5)
Investments (Note 5)
Interest receivable
Total restricted assets
Utility plant (Note 6):
In service:
Land and improvements
Structures and improvements
Equipment
Total
Less accumulated depreciation
Net utility,plant in service
Construction in progress (Note 7)
Total assets
Net utility plant
12
$ 356,364 $ 605,145
8,616,945 7,430,647
48,934 71,818
392,347 698,023
260,047 14,642
198,618 219,466
63,952 58,898
_ 9,937,207
9,098,639
874,232 898,317
69,989 76,743
944,221 975,060
14,484 8,508
3,203,672 3,580,421
37,537 5,488
_. 3,255,693 3,594,417
696,449 696,449
63,059,342 61,249,020
_ 1,607,713 1,436,777
65,363,504 63,382,246
...12,204,949 _ 10,915,541
53,158,555 52,466,705
3 599 692
_ 56,758,247
2 238 403
_ 54,705,108
70,895,368 ~ 68,373,224
See accompanying notes to financial statements.
Liabilities:
Current liabilities (payable from current assets):
Accounts payable
Revenue bonds payable, current portion (Note 8)
Interest payable
Other accrued expenses
Total
Current liabilities (payable from restricted assets):
Customer deposits
Total current liabilities
Long-term liabilities:
Revenue bonds payable, net of unamortized
discount (Note 8)
Other liabilities:
Deferred income
Unearned connection fees
Total other liabilities
Total liabilities
Equity:
Contributed capital:
Developers
Customers
Local and federal governments
Total contributed capital
Retained earnings:
Reserved for:
Unemployment
Revenue bond debt service
Construction and replacement
Total reserved
Unreserved
Total retained earnings
Total equity
Total liabilities and equity
438,552 $ 530,170
295,000 280,000
87,176 91,782
132,813 121,220
953,541 1,023,172
36,662 34,092
990,203 _ 1,057,264
3,850,064 4,142,244
516,574 516,574
90,583 80,781
607,157 597,355
5,447,424 5,796,863
41,526,301 40,096,877
13,178,494 11,874,679
1,095,691 695,793
55,800,486 52,667,349
16,037 15,122
856,808 912,750
1,770,767 1,636,187
2,643,612 2,564,059
7,003,846 _. 7,344,953
9,647,458 9,909,012
65,447,944 _ 62,576,361
70,895,368 ~ 68,373,224
Albemarle County Service Authority
Statements of Revenues, Expenses and Changes in Equity
Fiscal Years Ended June 30, 2000 and 1999
Operating Revenues:
Water sales and sewer service charges
Water and sewer connection fees
Total operating revenues
Operating expenses:
Purchase of bulk water (Note 9)
Purchase of sewage treatment (Note 9)
Administration
Finance
Engineering
Maintenance
Total operating expenses
Operating income before depreciation and amortization
Depreciation
Amortization
Operating income (loss)
Non-operating revenues (expenses):
Interest earnings
Buck Mountain surcharge
Rental income
Miscellaneous revenues
Bond interest charges
Equipment replacement expenses
Buck Mountain surcharge expenses
System improvement expenses
Miscellaneous expenses
Net non-operating revenues
Net income (loss):
Changes in equity:
Contributed capital, beginning of year
Contributions during year
Contributed capital, end of year
2ooo
$ 7,470,537
125,844
7,596,381
2,811,325
1,791,076
479,52O
641,414
686,430
898,876
7,308,641
287,740
1,289,408
9,574
(1,011,242)
758,740
97,50O
135,492
132,980
(236,730)
(33,127)
(97,500)
(7,667)
749,688
(261,554)
52,667,349
3,133,137
55,800,486
Retained earnings, beginning of year
Net income (loss)
Retained earnings, end of year
Total equity
9,909,012
(261,554)
9,647,458
65,447,944
See accompanying notes to financial statements.
14
1999
7,625,278
122,912
7,748,190
2,700,155
1,714,418
430,181
638,308
624,736
810,998
6,918,796
829,394
1,296,242
9,574
.. (476,422)
5O9,033
110,000
106,355
212,634
(251,135)
(81o)
(110,00o)
(7,585)
568,492
92,070
47,623,578
5,043,771
52,667,349
9,816,942
92,070
9,909,012
62,576,361
Exhibit 2
Albemarle County Service Authority
Statements of Cash Flows
Fiscal Years Ended June 30, 2000 and 1999
CASH FLOWS FROM OPERATING ACTIVITIES:
Operating income
Adjustments to reconcile operating income to net cash
provided by / used for operating activities:
Depreciation
Amortization
Sale of equipment
Proceeds from rental income and miscellaneous income
Payments for miscellaneous expenses
Changes in operating accounts:
(Increase) / Decrease in:
Accounts receivable Interest receivable
Inventory of materials and supplies
Prepaid expenses
Increase / (Decrease) in:
Accounts payable
Accrued expenses
Interest payable
Customer deposits
Unearned connection fees
Net cash provided by operating activities
CASH FLOWS FROM CAPITAL AND RELATED
FINANCING ACTIVITIES:
Payment for acquisition and construction of utility plant
Principal payment on bond maturities
Interest paid on bonds outstanding
Capital contributed by developers, customers and local government
Payments for equipment replacement
Cash received on repayment of contracts receivable
Sale of equipment
Net cash provided by (used for) capital and related financing activities
CASH FLOWS FROM INVESTING ACTIVITIES:
Net (increase) decrease in investments
Interest received on investments and cash equivalents
Net cash provided by (used for) investing activities
CASH FLOWS FROM NON-CAPITAL AND RELATED
FINANCING ACTIVITIES:
Increase (Decrease) in cash and cash equivalents for the year
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year
Noncash transactions affecting financial position:
Fixed assets acquired from developer contributions
See accompanying notes to financial statements.
_2000 1999
$ (1,011,242) $ (476,422)
1,289,408 1,296,242
9,574 9,574
(23,150) (896)
268,472 318,989
(7,667) (7,585)
305,676 (248,812)
(277,454) (25,378)
20,848 (33,068)
(5,054) (23,306)
Exhibit 3
(91,618) 83,613
11,593 17,359
(4,606) (3,102)
2,570 2,717
9,802 (45,351)
$ 497,152 $ 864,574
(1,532,225) (1,230,961)
(280,000) (270,000)
(236,730) (251,135)
1,322,815 1,433,345
(33,127) (810)
46,969 43,496
23,150 896
(689,14~) $ (275,169)
(809,549) (837,939)
758,740 509,033
(50,809) $ (328,906)
(242,805) 260,499
613,653 353,154
370,848 $ 613,653
$ 1,810,322 $ 3,921,813
ALBEMARLE COUNTY SERVICE AUTHORITY
Notes to Financial Statements
Fiscal Years Ended June 30, 2000 and 1999
NOTE 1-FINANCIAL REPORTING ENTITY:
The Albemarle County Service Authority (the "Authority") is a public body politic and corporate and an instrumentality of the
Commonwealth of Virginia organized pursuant to the provisions of the Water and Waste Authorities Act (the "Enabling Act"),
Chapter 28 of the Code of Virginia (1950), as amended. The Authority was created by action of the Board of County
Supervisors of the County of Albemarle, and was chartered by the State Corporation Commission on Apdl 23, 1964. By
resolution dated October 17, 1974, the Board of Supervisors extended the life of the Authority to October 17, 2024. The
purpose of the Authority, as set forth in its articles of incorporation as amended in December 1985, is to undertake such
projects as may be specified for the distribution and sale of potable water to retail customers and for the collection of
wastewater from retail customers and delivery of such wastewater to the Rivanna Water and Sewer Authority.
The Enabling Act provides that the Authority is authorized, subject to the restrictions of the Authodty's articles of
incorporation, among other things, (1) to acquire, construct, improve, operate and maintain any water system or sewage
disposal system, (2) to issue revenue bonds of the Authority, payable solely from revenues, to pay all or any part of the cost of
a water system or sewage disposal system, (3) to fix, revise, charge and collect rates, fees and charges for the use of and for
ti,.. :c;vices furnished by any system operated by the Authority, and (4) to enter into contracts with any unit, including counties
and cities and authorities, relating to the fumishing of services and facilities of any water system or sewage disposal system of
the Authority. The Enabling Act also provides that the Authority is subject in all respects to the jurisdiction of the Virginia State
Water Control Board pursuant to the provisions of the State Water Control Law.
The Authority has determined that it is a related organization to Albemarle County, Virginia in accordance with Govemmental
Accounting Standards Board (GASB) Statement 14, The Financial Reporting Entity. The Authority is a legally separate
organization whose board members are appointed by the Albemarle County Board of Supervisors. Since the Board of
Supervisors cannot impose its will on the Authority and since there is no potential financial benefit or burden in the relationship,
the Board of Supervisors is not financially accountable for the Authority. Accordingly, the Authority is not considered a
component unit of the County.
NOTE 2--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
a. Basis of Accounting and Measurement Focus - The accounts of the Authority are maintained on the accrual basis of
accounting. Under this method of accounting, revenues are recognized when eamed and expenses are recorded as liabilities
when incurred, without regard to receipt or payment of cash. The measurement focus of financial reporting is on the flow of
economic resources; thus, all assets and all liabilities are included on the balance sheets. The Authority applies all Financial
Accounting Standards Board (FASB) statements and interpretations issued after November 30, 1989, except for those that
conflict with or contradict GASB pronouncements.
b. Cash, Cash Equivalents and Investments - Cash and cash equivalents include cash on hand, amounts in demand
deposit accounts, certificates of deposit, and short-term investments with a matudty of less than three months when acquired
by the Authority. Investments consist of U.S. Govemment and agency obligations and repurchase agreements and are stated
at fair value.
c. Inventory of Materials and Supplies - Inventories are valued at the lower of cost or net realizable value, using the first-in,
first-out method of valuation.
d. Utility Plant and Depreciation - Purchased and constructed utility plant assets are recorded on the basis of cost.
Structures and improvements acquired by the Authority through contributions, such as from developers, are capitalized and
recorded in the accounts at fair market value on the date accepted. The Authority provides for depreciation of utility plant in
service on the straight-line method at amounts estimated to amortize the cost of assets over their estimated useful lives, as
follows:
StructUres and Improvements
Equipment
10 to 60 years
3 to 10 years
The Authority's policy is to capitalize fixed assets with a cost basis of five hundred dollars ($500) or more. Fixed assets of
less than five hundred dollars ($500) are expensed in the period acquired. When items of property or equipment are sold or
retired, the related cost and accumulated depreciation are removed from the accounts and any gain or loss is included in
results of operations.
e. Amortization of Bond Discounts - The total original discounts of $14,950 on the 1991 Bonds and $36,472 on the 1993
Bonds are being amortized over the lives of the issues. For the fiscal year ended June 30, 2000, $2,820 was included in
16
ALBEMARLE COUNTY SERVICE AUTHORITY
Notes to Financial Statements
amortization expense. The unamortized balances of $29,936 at June 30, 2000 and $32,756 at June 30, 1999 are recorded as
reductions of long-term debt outstanding.
f. Revenue - Customer water meters are read on a cyclical basis throughout a monthly pedod; bills are rendered and revenue
is recognized in the pedods that meters are read. The Authority does not accrue revenue for water distributed and sewer
collected but not yet billed at the end of the fiscal year.
g. Budgets - Budgets are adopted on a basis consistent with generally accepted accounting principles. Appropriations lapse
at the end of the fiscal year with the exception of capital projects, which continue until completed, and specific
re-appropriations for goods and services ordered but not received by June 30. Budgetary control is exercised at the
departmental level; any changes to the departmental budget totals require Board approval.
h. Allowance for Uncollectible Accounts - The Authority calculates its allowance for uncollectible accounts using historical
collection data and, in certain cases, specific account analysis. Historical collection data indicate that any uncollectible
amounts would be negligible. Management believes that any accounts that may be wdtten off would not be significant.
Accordingly, no allowance for uncollectible accounts has been established.
i. Accumulated Unpaid Sick and Vacation Pay - The Authority does not accrue sick pay when eamed since its employees
do not have vested rights to receive such pay except to the extent of time not worked due to sickness. Vacation pay, which is
payable upon separation from employment, is considered a liability and is expensed as earned. Accrued vacation pay is
recorded on the balance sheets at current pay rates in "Other Accrued Expenses."
j. Use of Estimates - The preparation of financial statements in conformity with generally accepted accounting principles
requires management to make estimates and assumptions that affect the amounts reported in the financial statements and
accompanying notes. Although these estimates are based on management's knowledge of current events and actions it may
undertake in the future, they may ultimately differ from actual results.
NOTE 3-CONTRACTS RECEIVABLE:
Sale of Water and Wastewater Treatment Facilities
Under the terms of a four-party agreement (Agreement) entered into on June 12, 1973 by the Authority with the County of
Albemarle, City of Charlottesville and the Rivanna Water and Sewer Authority (Rivanna), the Authority agreed to sell certain
water production, transmission and storage facilities and wastewater interception and treatment facilities to Rivanna. The
Agreement provides that the sale will not be consummated until ten years from the date of the agreement or at such later time
as the debts, if any, attributable to any of such facilities have been paid, or provision made for their payment, and that Rivanna
will lease the facilities until such time as the sale is consummated.
Although the sale has not actually been consummated under the terms of the Agreement, the transaction has been recorded
as an installment sale for accounting purposes. A portion of the contracts receivable balance at June 30, 2000 and 1999
relates to the uncollected balance of the sales pdce due from Rivanna. Contracts receivable payments are due through 2017
in amounts sufficient to service the Authority's debt related to the facilities sold. Arrangements for payment of the
then-remaining balance will be negotiated by Rivanna and the Authority at a later date.
Sale of Ivy Water Line
In 1977 an agreement was made with Rivanna to sell the Ivy Water Line for a total sales price of $394,953. This sale was
treated as an installment sales contract and bears interest at the rate of five percent (5%) per annum.
Summary of Contracts Receivable
Contracts receivable:
Sale of water and wastewater treatment facilities
Ivy water line
Total
2000 1999
$ 741,821 $ 751,766
181,345 218,369
$ 923,166 $ 970.135
ALBEMARLE COUNTY SERVICE AUTHORITY
Notes to Financial Statements
NOTE 3-CONTRACTS RECEIVABLE: (Continued)
Contracts receivable on financial statements:
Current portion
Long-term portion
Total
NOTE 4-RESTRICTED ASSETS:
2000 1999
$ 48,934 $ 71,818
874,232 898,317
$ 923.16~ $_970,135
The cash and cash equivalents, investments, and interest receivable thereon shown in the balance sheet as restricted assets
at June 30, 2000 consisted of the following:
Construction and Replacement
Unemployment Fund
Customers' Deposits
1986 Improvement & Redemption Fund
1991 Reserve Fund
1991 Interest Fund
1991 Revenue Fund
1993 Pdncipal Fund
1993 Interest Fund
1993 Reserve Fund
Totals
In.rest
CasWCash Receiv-
,~quivalen~ ,Inve~men~ able Total
$ 11,561 1,779,369 - 1,790,930
16,037 - 16,037
2,923 43,177 o 46,100
508,280 33,493 541,773
- 143,962 658 144,620
- 30,142 141 30,283
- 50,741 237 50,978
- 158,990 787 159,777
- 48,092 238 48,330
- 424,882 1,983 426,865
$ 14,484 ~,203,672 37~537 3,255~693
The cash and cash equivalents, investments, and interest receivable thereon shown in the balance sheet as restricted assets
at June 30, 1999 consisted of the following:
Construction and Replacement
Unemployment Fund
Customers' Deposits
1986 Improvement & Redemption Fund
1991 Reserve Fund
1991 Interest Fund
1991 Revenue Fund
1993 Principal Fund
1993 Interest Fund
1993 Reserve Fund
Totals
In,rest
Cash/Cash Receiw
Equivalen~ Investmen~ able Total
$ 8,153 2,113,953 2,122,106
15,122 15,122
353 38,848 39,201
500,000 2,423 502,423
1 146,455 251 146,707
95 - 95
1 79,110 22 79,133
- 179,582 632 180,214
- 82,545 290 82,835
- 424,711 1,870 426,581
$.. 8~508 3,580,42~ 5~488 9_~
NOTE 5-DEPOSITS AND INVESTMENTS:
At June 30, 2000 and 1999, the carrying value of deposits with banks was $370,848 and $613,653, respectively, and the
bank balance was $504,992and $735,310, respectively. The differences were due to outstanding checks, deposits in transit
and other reconciling items. The Authority maintains direct control over all deposits and investments except those in the
hands of the Fiscal Agent and the Trustees. At year-end all deposits were covered by federal depository insurance or
collateralized in accordance with the Virginia Secudty for Public Deposits Act (the Act). Under the Act, banks holding public
deposits in excess of the amounts insured by the FDIC must pledge collateral in the amount of 50% of excess
18
ALBEMARLE COUNTY SERVICE AUTHORITY
Notes to Financial Statements
NOTE 5-DEPOSITS AND INVESTMENTS: (Continued)
deposits to a collateral pool in the name of the State Treasury Board. Savings and loan institutions are required to collateralize
100% of deposits in excess of FDIC limits. The State Treasury Board is responsible for monitoring compliance with the
collateralization and reporting requirements of the Act and for notifying local governments of compliance by banks and savings
and loans.
The pools' collateral levels are determined monthly by the state using reports submitted by the banks detailing all public
deposits. The state requires banks to pledge 50% of the greater of average monthly balance or ending balance of all public
deposits. Since the Act authorizes the State Treasury Board to make a pro-rata assessment against all other participating
institutions to cover the uninsured public deposits in a failed or defaulting public depository, all bank deposits are categorized
as Class "1" in accordance with Governmental Accounting Standards Board Statement No. 3, Deposits with Financial
Institutions, Investments (including Repurchase Agreements), and Reverse Repurchase Agreements.
The Authority is authorized to invest in U.S. Govemment and agency securities, repurchase agreements, bankers'
acceptances, pdme commemial paper and obligations of the Commonwealth of Virginia and its political subdivisions and
agencies, and the State Treasurer's Local Government Investment Pool (LGIP). Pursuant to Sec.2.1-234.7 of the Code of
Virginia, the Treasury Board of the Commonwealth sponsors the LGIP and has delegated certain functions to the State
Treasurer. The LGIP reports to the Treasury Board at their regularly scheduled monthly meetings and the fair value of the
position in the LGIP is the same as the value of the pool shares, i.e., the LGIP maintains a stable net asset value of $1 per
share.
Investments are categorized below to give an indication of the level of credit dsk assumed by the Authority at year-end.
Category 1 includes investments that are insured or registered, or for which the securities are held by the Authority or its
safekeeping agent in the Authodty's name. Category 2 includes uninsured or unregistered investments for which the
securities are held by a counterparty's trust department or safekeeping agent in the Authodty's name. Category 3 includes
uninsured and unregistered investments for which the securities are held by the counterparty, or by its trust department or
safekeeping agent, but not in the Authority's name. The following excludes $4,597,578 held by LGIP at June 30, 2000, which
need not be classified in the above categories:
Category Carrying Fair
I 2 3 Value Value
U. S. &Agencies $ 7,223,039 - 7,223,039 7,213,805
In Fiscal 1998 the Authority adopted the provisions of Government Accounting Standards Board Statement 31 which
requires the recording of investments at fair value. The effect of this change in fiscal 2000 resulted in the Authority recording a
net decrease in the fair value of investments of $9,234. This amount has been recorded in miscellaneous revenue and in
restricted investments.
NOTE 6-CHANGES IN UTILITY PLANT:
Details of changes in utility plant for the fiscal year ended June 30, 2000 are as follows:
Utility Plant:
Balance Balance
July 1, 1999 Additions Deletions June 30, 2000
Land and improvements
Structures and improvements
Equipment
Totals
$ 696,449 - 696,449
61,249,020 1,810,322 - 63,059,342
1,436,777 261,086 90,150 ~,607,713
$ 63=382~246 2=071A08 90~15Q 65,363,504
ALBEMARLE COUNTY SERVICE AUTHORITY
'Notes to Financial Statements
NOTE 6-CHANGES IN UTILITY PLANT: (Continued)
Details of changes in utility plant for the fiscal year ended June 30, 1999 are as follows:
Balance
July 1, 1998
Utility Plant:
Land and improvements
Structures and improvements
Equipment
Totals
Additions Deletions
$ 696,449 -
56,874,306 4,374,714
1,271,221 244,287
$ 5&841,976 4:619,001.
NOTE 7--CONSTRUCTION WORK IN PROGRESS:
78,731
78.731
Details of construction work in progress for the fiscal year ended June 30, 2000 are as follows:
Project
Balance Cost Cost of
July 1, Adjust- Construc-
1999 ments tion
Country Green Water Line $ 131,833
Woodbrook Sewer Pumping Stno 436,082
Key West Project 523,514
Flordon Water 592,558
Camelot, Berkeley Sewer 209,547
Monticello HS Water Line 58,210
Rte. 250 W WL Oversizing 23,931
Geographic Information System 15,721
Four Seasons Water Line 35,590
Albemarle Square Sewer 30,053
Jouett/Greer Water Line 87,826
Cory Farm WL Oversizing 31,963
Meter Changeout 579
Farmington WL Replacement
Northfields Water Pumping Station
Proffit/Forest Lake Water
Stonehenge Water
Stoney Point Sewer
Four Seasons PRV
Northfields Sewer
Construction Crew
Miscellaneous Construction
60,966 . (32,358)
132,677
17,721
120
90,484
96,373
80,822
355,848
69,354
44,060
6,771
25,331
17,315
18,333
343,536
104,419
8,423
Balance
June 30,1999
696,449
61,249,020
1,436,777
Transfers
to Struc-
tures and
Improve-
ments
Balance
June 30,
2000
131,833
568,759
523,514
592,558
227,268
58,210
24,051
15,721
126,074
126,426
168,648
31,963
356,427
69 354
44060
6 771
25 331
17 315
18 333
343536
104419
19,121
Totals
$2,238,40_3 (3Z358) 1,411,587
17,940 3~599:692
2O
ALBEMARLE COUNTY SERVICE AUTHORITY
Notes to Financial Statements
NOTE 7-CONSTRUCTION WORK IN PROGRESS: (Continued)
Details of construction work in progress for the fiscal year ended June 30, 1999 are as follows:
Ednam Forest Water Tank
Rte. 29
Woolen Mills Sewer
Country Green Water Line
Woodbrook Sewer Pumping Stn.
Airport Rd. / Proffitt Rd. Sewer
Key West Project
Deerwood Water / Sewer
Flordon Water
Camelot, Berkeley Sewer
Nob Hill Water
Monticello HS Water Line
Rte. 250 W WL Oversizing
Geographic Information System
Four Seasons Water Line
Albemarle Square Sewer
Jouett/Greer Water Line
Cory Farm WL Oversizing
Meter Changeout
Miscellaneous Construction
Totals
Project
Balance Cost Cost of
July 1, Adjust- Construc-
1998 ments tion
$ 141,758
21,799
21,562
131,833
54,527
75 916
520 710
497 413
358 995
54933
5840
58.210
2 131
12 306
6,657
$1,964,590
(29,902)
29,902
381,555
2,804
233,563
184,516
21,800
3,966
35,590
151
87,826
31,963
579
179,573
1,163,886
Transfers
to Struc-
tures and
Improve-
men~
141,758
21,799
21,562
75,916
497,413
5,840
551
125,234
890;073
Balance
June 30,
1999
131,833
436,082
523,514
592,558
209,547
58,210
23,931
15,721
35,590
30,053
87,826
31,963
579
· 60,996
2,238,403
ALBEMARLE COUNTY SERVICE AUTHORITY
Notes to Financial Statements
NOTE 8-LONG-TERM DEBT:
Annual requirements to amortize long-term debt and related interest are as follows:
Year EndinR June 30, Pdncipal In.rest
2001 295,000 222.141
2002 310,000 207,322
2003 325,000 191,296
2004 345,000 174,088
2005 365,000 155,074
2006-2010 1,845,000 469,628
2011-2013 690,000 64,688
Totals $ 4,175,000
Less unamortized discount (29,936)
Net totals $~
1,484,237
Changes in Long-term Debt:
Revenue bonds payable at July 1, 1999
Retirements:
Water and Sewer System Revenue Bonds, Series 1991
Water and Sewer System Refunding Bonds, Series 1993
Total retirements
Amortization of bond discounts
Total reduction of bonds payable
Revenue bonds payable at June 30, 2000
$ 4,422,244
85,000
195,000
280,000
(2,820)
277,18q
Details of Long-term Indebtedness:
A. Water and Sewer System Revenue Bonds, Series of 1991 - The total amount authorized 000. The
proceeds of the bonds, which were purchased by the Virginia Resources Authority (VRA) under its Eot Program (Lot
Number 8), were used, along with available Authority funds, to retire outstanding Farmers' Home Administration debt. The
Bonds are fully registered, are issued in $5,000 denominations and integral multiples of $5,000, are dated August 14, 1991
and mature on October 1, 2006. As part of the Bond Lot program, the VRA deposited an additional $145,000 in a Capital
Reserve Fund, to be reimbursed by the Authority if drawn upon. Since this amount must be repaid to the VRA upon final
maturity, it has been included in the total amount of proceeds; therefore, the balance on these bonds at June 30, 2000 and
1999 was $930,000 and $1,015,000, respectively. The unamortized discount amounted to $6,228 at June 30, 2000.
B. Water and Sewer System Refunding Revenue Bonds, Series of 1993 - The total amount authorized was $3,795,000.
The proceeds of the bonds, along with other available funds, were used to advance refund 1986 Revenue Bonds matudng in
1998 and thereafter. The Bonds were issued under a Supplemental Agreement of Trust between the Authority and Signet
Trust Company. The issue is composed of $1,255,000 in sedal bonds matudng on August 1 of the years 1998 through 2003,
in amounts ranging from $190,000 to $235,000, with interest rates ranging from 4% to 4.85%; $165,000 in term bonds
matured August 1, 1997 at 3.625%; $775,000 in discounted term bonds due August 1, 2006; and $1,600,000 in discounted
ALBEMARLE COUNTY SERVICE AUTHORITY
Notes to Financial Statements
NOTE 8-LONG-TERM DEBT: (Continued)
term bonds due August 1, 2011. The balance on these bonds at June 30, 2000 was $3,245,000 and the unamortized
discount was $23,708.
NOTE 9-PURCHASE OF WATER AND SEWAGE TREATMENT SERVICES:
The Authority, under the terms of a Service Agreement dated June 12, 1973, purchases all water and sewage treatment
services from Rivanna Water and Sewer Authority. These purchases amounted to $2,700,155 and $2,239,543 for water and
$1,714,418 and $1,871,860 for sewage treatment services for the years ended June 30, 2000 and 1999, respectively.
NOTE 10-RETIREMENT PLAN:
Description and Funding Procedure:
The Authority contributes to the Virginia Retirement System (VRS), which is both an agent and cost-sharing multiple-
employer defined benefit public employee pension plan that acts as a common investment and administrative agent for
political subdivisions in the Commonwealth of Virginia. The Authority's payroll for employees covered by the VRS for the year
ended June 30, 2000 was $1,623,159. The total payroll for all Authority employees was $1,729,418.
All full-time, saladed permanent employees of participating employers must participate in the VRS. Benefits vest after 5
years of service. Employees who retire with a reduced benefit at age 55 with at least 5 years of credited service are entitled to
an annual retirement benefit, payable monthly, for life in an amount equal to 1.5% of their average final salary (AFS) up to
$13,200 plus 1.65% of AFS over $13,200 for each year of credited service. An optional reduced retirement benefit is available
to members of VRS as early as age 50 with 10 years of credited service. Employees with 35 or more years of credited service
are entitled to an annual benefit equal to 1.65% of AFS for each year of credited service. In addition, retirees qualify for annual
cost-of-living increases beginning in their second year of retirement. AFS is defined as the highest consecutive 36 months of
salary. Benefits are actuadally reduced for retirees who retire pdor to becoming eligible for full retirement benefits. The VRS
also provides death and disability benefits. Title 51.1 of the Code of Virginia (1950), as amended, assigns the authority to
establish and amend benefit provisions to the State legislature.
VRS issues a publicly available comprehensive annual financial report that includes financial statements and required
supplementary information. A copy of that report may be obtained by wdting to the VRS at P.O. Box 25, Richmond, VA
23218-2500.
Funding Policy:
Employees are required by Title 51.1 of the Code of Virginia (1950), as amended, to contribute 5% of their annual salary to
the VRS. This 5% member contribution has been assumed by the Authority. If an employee leaves covered employment the
accumulated contributions plus interest earned may be refunded to the employee. The employer is required to contribute the
remaining amounts necessary to fund its participation in the VRS, using the actuarial basis specified by the statute and
approved by the VRS Board of Trustees. The Authodty's contribution rate for the fiscal year ended June 30, 2000 was 1.89%
of annual covered payroll.
Related Party Investments:
The Authority has no loans from VRS or any related parties to the pension plan.
ALBEMARLE COUNTY SERVICE AUTHORITY
Notes to Financial Statements
NOTE 10-RETIREMENT PLAN: (Continued)
Annual Pension Cost:
' For fiscal 2000, the Authority's annual pension cost of $30,678 (excluding the employee share assumed by the Authority
which was $81,158) was eq ual to the Authodty's required and actual contributions. The required contribution was determined
as part of the June 30, 1998 actuarial valuation using the entry age normal actuarial cost method. The actuarial valuation is
performed on a biennial basis; June 30, 1998 is the most recent actuarial valuation available. The valuation and actuarial
assumptions are as follows:
Valuation date
Actuarial cost method ...............................................................
Amortization method .................................................................
Payroll growth rate ....................................................................
Remaining amortization period ................................................
Asset valuation method ............................................................
Actuarial assumptions:
Investment rate of return~ '~ .....................................................
Projected salary increases ...................................................
Cost-of-living adjustment ........................................................
June 30, 1998
Entry Age Normal
Level percent, Closed
4%
10 Years.
Modified market
8.00%
4.00% to 6.15%
3.5%
Includes inflation at 4%.
The following trend information is presented for three years only, since only three years' information is available:
Annual Percentage Net
Fiscal Year Pension Of APC Pension
Ending Cost (APC) Contributed Obligation
June 30, 1998 $22,817 100% $
June 30, 1999 $27,717 100% $
June 30, 2000 $30,768 100% $
Schedule of Funding Progress:
Valuation
Date
6/30/94
6/30/96
6/30/98
6/30/99
Required Supplementary Information
Actuarial Actuarial Unfunded
Value of Accrued (Excess Funded) Annual
Assets Liability Actuarial Funded Covered
(AVA)_ (AAL) Accrued Liability Ratio Payroll
$1,807,090 $1,446,192 $(360,898) 125.0 $1,.023,592
2,359,049 2,042,485 (316,564) 115.5 1,207,277
3,332,300 3,022,877 (309,423) 110.2 1,310,629
3,863,454 3,469,202 (394,252) 111.4 1,562,559
Unfunded
(Excess Funded)
AAL as %
of Payroll
(35.3)%
(26.2)
(23.6)
(25.2)
ALBEMARLE COUNTY SERVICE AUTHORITY
Notes to Financial Statements
NOTE 11-SEGMENT INFORMATION:
The Authority provides two services which are financed by user charges - water distribution and sewage collection services.
The key financial data for the years ended June 30, 2000 and 1999 for these services are as follows:
2000
Water Sewer Total
Operating revenue $ 4,600,837 2,995,544 7,596,381
Operating expenses:
Depreciation 560,892 728,516 1,289,408
Other 4,756,842 2,561,373 7,318,215
Total 5,317,734 3,289,889 8,607,623
Operating income (loss)
Non-operating revenue (net)
(716,897) (294,345) (1,011,242)
487,297 262,391 749,688
Net income (loss)
$ (229;600) (31;954) (261~554)
Assets
Bonds payable (net)
Net working capital, excluding
restricted assets and liabilities
Equity
Acquisition of property, plant and equipment
Capital contributions
30,485,008 40,410,360 70,895,368
829,013 3,316,051 4,145,064
5,120,690 3,862,976 8,983,666
30,106,054 35,341,890 65,447,944
125,321 135,765 261,086
1,284,586 1,648,551 3,133,137
.1999
Operating revenue
Operating expenses:
Depreciation
Other
Water Sewer Total
$ 4,747,966 3,000,224 7,748,190
563,865 732,377 1,296,242
4,034,902 2,893,468 6,928,370
Total
4,598,767 3,625,845 8,224,612
Operating income (loss)
Non-operating revenue (net)
149,199 (625,621) (476,422)
369,520 198,972 568,492
Net income (loss)
$ 51&719 (426~649) 92;070
Assets
Bonds payable (net)
Net working capital, excluding
restricted assets and liabilities
Equity
Acquisition of property, plant and equipment
Capital contributions
29,742,353
890,763
38,630,872 68,373,225
3,531,481 4,422,244
4,603,016 3,472,451 8,075,467
29,723,771 32,852,590 62,576,361
127,028 117,259 244,287
2,395,791 2,647,980 5,043,771
NOTE 12-CONTINGENT LIABILITIES:
Unemployment Insurance - The Authority has elected to meet the requirements of the Unemployment Compensation Act
through self-insurance, whereby the Authority will be responsible for all unemployment benefits paid by the Virginia
Employment Commission on its behalf. The Authority incurred no costs for unemployment benefits during the fiscal years
ended June 30, 2000 and 1999.
ALBEMARLE COUNTY SERVICE AUTHORITY
Notes to Financial Statements
NOTE 12--CONTINGENT LIABILITIES: (Continued) ·
Pending Litigation - At June 30, 2000 there were no matters of litigation involving the Authority which would materially
affect the Authority's financial position should any court decisions on pending matters not be favorable to the Authority
NOTE 13 - DEFERRED COMPENSATION PLAN:
Since 1988 the Authority has offered its employees a deferred compensation plan created in accordance with Intemal
Revenue Code Section 457. The Plan, available to all Authority employees, permits them to defer a maximum of 25 percent
of their salary or $8,000 per year, whichever is less. The deferred compensation is not available to employees until
termination, retirement, death, or unforeseeable emergency. In fiscal year 1998, the plan was converted to a trustee plan in
which the plan assets were no longer available to the Authodty's general creditors. The plan assets were previously reported
at market value on the Authodty's balance sheet. Beginning In fiscal 1998, the plan assets are no longer presented in the
A~ ~th'~dtv's financial statements.
NOTE 14 - RISK MANAGEMENT:
The Authority is exposed to various dsks of loss related to torts, damage to property, injudes to employees, destruction of
assets and natural disasters. These risks are covered by commercial insurance purchased through independent third parties
(see Table 3, Page 30, for a premium breakdown of these policies). For the past three fiscal years, settlement amounts under
:,these policies have not exceeded 8nsurance coverage.
The Authority also participates in the Virginia Municipal Group Self Insurance Association (VMGSIA) dsk pool for Workers'
Compensation exposure and the Division of Risk Management~s Virginia Local Govemment Risk Management Plan (VARISK
for exposures relating to errors and omissions by elected and appointed officials. Both of the latter are dsk pools which, for
i premiums paid, protect Virginia state and local govemment entities; the VMGSIA pool is administered by the Virginia Municipal
League, and the Risk Management Plan is administered by the Virginia Department of General Services.
The limits of the pools' liability to the Authority are.as follows:
VMGSIA - Workers' Compensation: Specific excess limits as per statute, aggregate excess limits up to the limits of the
Aggregate Excess Loss Fund. Employers' Liability: $500,000 for each accident, $500,000 policy limit for injury by disease.
VARISK 2 - Public officials' general liability - $1,000,000 per occurrence, with no aggregate, payment of all defense costs,
$100,000 limit on property damage.
NOTE 15 - SUBSEQUENT EVENTS:
In late May ConAgra Frozen Foods, the Authodty's largest customer, announced that it was closing its plant in the fall of
2000 and ending all production by October. In fiscal 2000 ConAgra used 7.9% of all water sold by the Authority, representing
6.25% of water revenue; its sewer treatment accounted for 9% of total volume and revenue. Since these services are
provided by the Crozet water and sewer systems, and comprise about half those systems' volumes, we anticipate significant
reductions in Crozet wholesale costs from Rivanna. Nevertheless, unless a company with similar utility demands quickly buys
and activates the plant, we expect a reduction of 7 to 9% in water and sewer revenues in the coming fiscal year, partially
offset by lower Rivanna charges.
ALBEMARLE COUNTY SERVICE AUTHORITY
.Comparative Schedule of Revenues-Budqet and Actual
For the Fiscal Years Ended June 30, 2000 and 1999
200q 1999
Variance Variance
Budget Favorable Budget Favorable
as (Unfavor- as (Unfavor-
Amended Actual able) Amended Actual able)
Water/sewercharges $7,625,148 7,470,537 (154,611) $7,139,828 7,625,278 485,450
Connection charges 157,475 125,844 (31,631) 139,095 122,912 (16,183)
Interest earnings 435,000 758,740 323,740 300,000 509,033 209,033
Rental income 107,013 135,492 28,479 99,974 106,355 6,381
Other 242,400 230,480 (11,920) 242,400 322,634 80,234
Total revenues $8,567,036 8~721,093 154,057 $7~921,297 ¢.,,¢_8_6,,2_~ 764;915
Comparative Schedule of Expenses--Bud.qet and Actual
For the Fiscal Years Ended June 30, 2000 and 1999
2000 1999
Variance Variance
Budget Favorable Budget Favorable
as (Unfavor- as (Unfavor-
Amended Actual able) Amended Actual able)
Operatin.q Expenses:
Water purchase/
wastewater treatment $4,873,490 4,602,401
Administration 507,509 479,520
Finance 674,638 641,414
Engineering 754,414 686,430
Maintenance 1,196,091 898,876
271,089 $4,496,161 4,414,573 81,588
27,989 489,195 430,181 59,014
33,224 674,638 638,308 36,330
67,984 639,938 624,736 15,202
297,215 861,698 810,998 50,700
Totaloperating $8,100,142 7,308,641 697,501 7,161,630 6,918,796 242,834
expenses
Depreciation 1,310,000 1,289,408 20,592 1,335,000 1,296,242 38,758
Amortization 9,574 (9,574) 9,574 (9,574)
Non-Operating Expenses:
Bond interest charges 231,800
Other 139,864
Total non-operating
expenses
Totalexpenses
236,730 (4,930) 244,700 251,135 (6,435)
138,294 1,570 88,400 118,395 (29,995)
..¢71,664 375,024
$9,687,806 8,982,647
(3,360) 333,100 369,530 (36,430)
705,159 $8~829,730 8,594,142 (238.588)
Schedule 1
Schedule 2
See accompanying independent auditors' report
This page left blank: intentionall~
STATISTICAL SECTION
28
Fiscal
Year Ended
June 30,
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
Service
Charges
$4,946 752
4,993 186
5,043 711
5,874 882
6,081 569
6,208.042
6,286 926
6,808 608
7,625 278
7,470 537
ALBEMARLE COUNTY SERVICE AUTHORITY
.Revenues by Source
.Last Ten Fiscal Years
ConneXion Rental
Charges !ncome ..Interest Other
55,491 32,102 496,349 ~48,986
140,841 35,983 393,989 264,467
384,206 32,571 304,313 197,147
122,966 34,727 211,708 467,880
142,058 72,571 413,934 254,776
68,085 74,265 369,551 270,569
178,967 73,464 462,952 244,394
330,072 82,710 534,135 177,043
122,912 106,355 509,033 322,634
125,844 135,492 758,740 230,480
Total
5,779 680
5,828 466
5,961 948
6,712 163
6,964 908
6,990 512
7,246 703
7,932,568
8,686,212
8,721,093
Table I
Fiscal
YearEnded
gune 30,
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
Administration
$277,028
305,377
290,468
303,162
321,152
333,298
344,678
366,317
430,181
479,520
~xpenses by Function
Last Ten Fiscal Years
Operations and
..Maintenance
4,025,399
4,103,358
4,566,461
5,033,782
5,381,631
5,515,808
5,820,465
6,266,355
6,488,615
6,829,121
Bond
Interest
,,Char~es
419,285
402,672
404,651
367,859
305,816
294,380
278,593
262,326
251,135
236,730
Depreci-
ation
"576,452
639,315
703,205
737,945
822,828
962,048
1,143,301
1,203,937
1,296,242
1,289,408
Other
43 595
13.078
17 817
27 226
17 784
25 867
14.153
251 670
127.969
147 868
Table 2
Total
5,341,759
5,463,89O
5,982,602
6,469,974
6,849,211
7,131,401
7,601,190
8,350,604
8,594,142
8,982,647
29
ALBEMARLE COUNTY SERVICE AUTHORITY
Schedule of Insurance in Force
June 30, 200.0_
Company Name/
Type Coverage
Policy Policy Period
Number From To
VACo/General Business Policy
(Including Auto, General
Liability, Property, Excess
Liability and Crime)
Annual
Premium
Kemped
Boiler & Machinery
VA-AL-04A-97 7/1/99 6/30/00 $35,915
VaRisk2/
P, ,bile Officials' Liability
i 3XM051109-02 7/1/99 729
Virginia Municipal Group
Self Insurance Association/
Workers' Compensation
0740 7/1/99 1,929
W107 7/1/99 23,011
ALBEMARLE COUNTY SERVICE AU-I
Fiscal
Year Direct
Ended Gross Operating~
June 30, Revenue Expenses
1991 $5,779,680
1992 5.822,192
1993 5,961,948
1994 6,712,163
1995 6,964,908
1996 6,990,512
1997 7,246,703
1998 7,932,568
1999 8,686,212
2000 8,721,093
Revenue Bond Coverage
Last Ten Fiscal Years
Net Revenue
Available Debt Requirements
for Debt
Service Principal Interest Total
4.302,427
4.408,735
4,859,568
5 346,518
5 710,993
5 865,400
6 169,722
6 632,672
6 918,796
7 308,641
1,477,253
1,413,457
1,102,380
I 365,645
I 253,915
1 125,112
1 076,981
1 299,896
I 767,416
I 412,452
111,863
95,000
160,000
165 000
215.000
230 000
235 000
255 000
270 000
280 000
396,164 508,027
370,061 465,061
389,811 549.811
367,859 532,859
303,887 518,887
291,529 521,529
277,999 512,999
263,538 518,538
251,135 521,135
236,730 516,730
Excluding depreciation and amortization.
30
Table 3
Table 4
Cover-
age
2.91
3.04
2.01
2.56
2.42
2.16
2.10
2.51
3.39
2.73
ALBEMARLE COUNTY SERVICE AUTHORITY
Billed Services and Connections
Last Ten Fiscal Years
Fiscal Year
Ended June 30,
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
Water
Billed Services
(Thousands of gallons)
Sewer
1,316,771
1,302,740
1,293,836
1,466,772
1,505,402
1,539,069
1,528,069
1,637,456
1,800,333
1,752,774
956,455
961,145
989,349
1 100,288
I 152,090
1 190,740
1183,519
1.230,020
1,326,377
1,304,204
Construction, Property Value and Bank Deposits
Last Ten Fiscal Years
Fiscal Year Property
Ended June 30, Construction Value
1991 $ 602,889 $23,049,255
1992 753,505 25,012,289
1993 3,377,773 26,644,881
1994 2,928,588 28,522,359
1995 976,756 35,302,202
1996 426,547 42,611,971
1997 379,334 44,956,750
1998 1,664,163 49,144,617
1999 1,038,101 52,466,706
2000 1,411,587 53,158,555
~ Includes funds held by Fiscal Agent and Trustee.
Source: Authority financial reports and accounting records.
31
Total
Number of
Connections
8,737
9,242
9,490
10,112
10,593
10,957
11,401
12,050
12,496
12,957
Bank
Deposits~
$5,611,600
2,859,317
1,258,150
526740
248961
335 735
328 635
353 154
613 653
370648
Table 5
Table 6
Table 7
ALBEMARLE COUNTY SERVICE AUTHORITY
Miscellaneous Statistical Data
Year of incorporation: 1964
Type of Entity: Independent authority created pursuant to the Virginia Water and Sewer
Authorities Act, Section 15.1-1239, Code of Virginia (1950), as amended.
Number of employees: 51
Number of connections: 12,500
Miles of water lines: 247
Miles of sewer lines: 184
Fire hydrants: 1,651
Total revenue bonds outstanding: $4.1 million
Net book value of utility plant in service: $56 million
Fiscal year 1998 water consumption of ten largest customers:
Name
ConAgra Frozen Foods
Farmington, Inc.
Southwood Mobile Homes
Squire Hill Apartments
Westgate Apartments
Turtle Creek Apartments
Four Seasons Apartments
Old Salem Apartments
Colonnades
Boar's Head Inn
Type of Operation
Food processor
Country club
Mobile home park
Apartments
Apartments
Apartments
Apartments
Apartments
Retirement home
Hotel / convention center
Water
Consum~ion
(Gallons)
138,326,900
30,692,600
28,283,500
21,362,850
21,216,200
18,112,100
16,580,300
16,537,500
15,474,700
13,243,700
Percent of
Total Water
Sales
7.89 %
1.75
1.61
1.22
1.21
1.03
.95
.94
.88
.76
TOTALS
319:830:35Q
1_8_,2_5%
ALBEMARLE COUNTY SERVICE AUTHORITY
Miscellaneous Statistical Data (Continued)
Albemarle County
Demographic Statistics
Calendar
Year
1990
1991
1992
1993
1994
.1995
1996
1997
1998
1999
N/A: Notavailable
Per Capita
Income as
Percent
Popu- Per Capita of U.S.
lation(1) Income(3) Averaqe('3)
68,172(2) $20,073 108%
69,500 20,476 104
70,300 21,633 105
72,400 22,926 108
74,300 25,544 115
75,900 26,686 116
78,400 27,879 115
79,200 29,063 115
80,700 30,947 114
81,600 N/A N/A
School
Enroll-
ment(4)
10,144
10,188
10,436
10 581
10 889
11 123
11 344
11644
11~981
12 187
Unemploy- ment
Rate(5)
2.3%
4.4
4.6
3.1
2.9
2.4
2.6
2.2
1.4
1.4
Sources:
(1) 1991-99, Weldon Cooper Center for Public Service, University of Virginia
(2) U.S. 1990Census
(3) U.S. Bureau of Economic Analysis, Charlottesville-Albemarle area
(4) Albemarle County Education Department
(5) Virginia Employment Commission for Charlottesville Metropolitan Statistical Area
Albemarle County Area: 740 square miles
Albemarle County Land Use Distribution - 1986
Estimated Percent
Category Acreaqe of Total
Residential 20,688 4.37%
Commercial 975 .21
Industrial 1,666 .35
Public 14,341 3.03
Agriculture 108,948 23.00
Horticulture 1,933 .41
Forestry 209,887 44.32
University of Virginia 2,070 .44
Other~ 113,092 23.87
Totals
Source: Albemarle County Annual Report, 1987.
~ Including open, water and road rights-of-way.
473~600 100.00%
33
Table 7
ALBEMARLE COUNTY SERVICE AUTHORITY
Miscellaneous Statistical Data (Continued)
Albemarle County Construction Data
Last Ten Calendar Years
Non-
Residential Residential~
Number of Estimated New
Calendar Dwelling Value of Construction
Year Units Bu Idin.q Permits & Improvements
1990 665 $ 61,802,696 $ 31,122,634
1991 614 51,285,672 46,935,688
1992 866 68,855,330 42,455,317
1993 805 78,810,454 45,590,662
1994 939 87,244,515 49,028,676
1995 596 75,679,003 48,061,169
1996 835 88,409,350 44,561,563
1997 921 101,181,621 120,413;002
1998 874 113,548,623 93,877,650
1999 767 135,497,848 69,248,982
Source: Albemarle County Planning Department.
Includes residential alteration, commercial, institutional and farm construction and improvements.
Volume Charges, Last Ten Fiscal Years
(Rate per thousand gallons billed)
Water Sewer
Fiscal Year(s)
Ended June 30, Volume Rate Volume
1991- 0-1,500,000 2.04 metered water
1993 Over 1,500,000 1.80 consumption
1994- 0-1,500,000 2.12 metered water
1996 Over 1,500,000 1.88 consumption
1997- 0-4,000,000 2.18 metered water
1998 Over 4,000,000 1.88 consumption
1999- 0-4,000,000 2.25 metered water
2000 Over 4,000,000 1.95 consumption
34
Rate
2.04
2.12
2.20
2.25
Table Z
COMPLIANCE SECTION
ROBINSON~ FARMER~ COX ASSOCIATES
A PROFESSIONAL LIMITED LIABILITY COMPANY
CERTIFIED PUBLIC ACCOUNTANTS
REPORT ON COMPLIANCE AND ON INTERNAL CONTROL OVER FINANCIAL REPORTING
BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN
ACCORDANCE WITH GOVERN/HENT ,~UDITING ST/~ND/~RDS
TO THE BOARD OF DIRECTORS
ALBEMARLE COUNTY SERVICE AUTHORITY
CHARLOTTESVILLE, VI RG I NIA
We have audited the financial statements of the Albemarle County Service Authority as of and for the
year ended June 30, 2000, and have issued our report thereon dated August 4, 2000. We conducted
our audit in accordance with generally accepted auditing standards and the standards applicable to
financial audits contained in Government Auditing Standards, issued by the Comptroller General of
the United States. Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material misstatement.
Compliance
As part of obtaining reasonable assurance about whether Albemarle County Service Authority's
financial statements are free of material misstatement, we performed tests of its compliance with certain
provisions of laws, regulations, contracts and grants, noncompliance with which could have a direct
and material effect on the determination of financial statement amounts. However, providing an
opinion on compliance with those provisions was not an objective of our audit and, accordingly, we
do not express such an opinion. The results of our tests disclosed no instances of noncompliance that
are required to be reported under Government Auditing Standards.
Internal Control Over Financial Reporting
In planning and performing our audit, we considered Albemarle County Service Authority's internal
control over financial reporting in order to determine our auditing procedures for the purpose of
expressing our opinion on the financial statements and not to provide assurance on the internal control
over financial reporting. Our consideration of the internal control over financial reporting would not
necessarily disclose all matters in the internal control that might be material weaknesses. A material
weakness is a condition in which the design or operation of one or more of the internal control
components does not reduce to a relatively Iow level the risk that misstatements in amounts that would
be material in relation to the financial statements being audited may occur and not be detected within
a timely period by employees in the normal course of performing their assigned functions. We noted
no matters involving the internal control over financial reporting and its operation that we consider to
be material weaknesses.
This report is intended for the information of the Board of Directors, management, and regulatory
agencies. However, this report is a matter of public record and its distribution is not limited.
Charlottesville, Virginia
August 4, 2000 3~5